Business Clusters And The Transportation Squeeze
ST. HELENA, CA – It’s a fine Saturday, and the traffic lines up on Highway 29 as the day’s crop of tourists meander from vineyard to vineyard along the road that bisects Napa Valley.
By year’s end, 4.5 million people will have passed through, sampling vintages from the state that grows 92% of the nation’s grapes and supplies 60% of its wine. More than 200 million cases of California wine are sold within the United States each year; a further 250 million find their homes abroad. California is the world’s fourth largest wine exporter, after Italy, France, and Spain.
And Napa Valley is at the heart of it all.
The 30-mile-long valley holds what economists term a “business cluster” – a local clump of buyers, suppliers, and complementary businesses that share a common industry (in this case, winemaking). Napa’s soils and climate (the so-called “terroir” which defines a region’s vineyard potential) first established its winemaking credentials, but as its reputation grew, vinters and retailers alike flocked to the region.
By concentrating their financial capital and expertise within the region, wine industry members drove innovation, stimulated competition, and opened the doors for new businesses. Their collective efforts attracted international attention, more visitors, and more investment: They put Napa Valley on an international map.
Napa is just one of dozens of business clusters around the world – Silicon Valley is another example even closer to home.
Grounded in a special environment, a local knowledge base, or inexpensive labor, business clusters thrive in a globalized economy. Goods and services produced with the cluster’s particular efficiency or panache can be relayed anywhere on the planet within the span of minutes, hours, or days.
Because the global economy connects multiple supply and demand points, it winnows the market down to the most cost-effective producers, often with marked gains in efficiency. For example, by growing crops on farmland matched to their needs and then shipping those crops abroad to meet market demand (rather than forcibly growing them on dry, but local, sites), we save 100 trillion gallons of water globally.
When economic efficiency produces environmental opportunity, it’s tempting to think only of globalization’s win-win aspects. In reality, however, by focusing on the outcomes at the endpoints – monsoon-watered jasmine rice paddies in Thailand; the canvas bag of pearly grains at my parents’ home in New Jersey – we often forget about what happens in between.
Unfortunately, that in-between part is going to demand our attention.
Globally, a quarter of our carbon dioxide emissions (and a third of United States emissions) come from the transportation sector. Some of that comes from cars, and buses, and commercial airliners. But a whole bunch of the rest comes from shipping wine, pineapples, computer parts, and all sorts of things from business center to strip mall.
Climate change aside, the reliance of shipping on fossil fuels is inherently unsustainable. Regardless of which supply estimates you believe, fossil fuel resources are finite. If we don’t notice shortages in our lifetimes – and we probably will – then our children will.
Rising fuel prices are the first signs of dwindling supplies. When energy costs go up, so too will the costs of producing, packaging, and, especially, shipping that Napa-grown bottle of wine. Already, winemakers are shipping wine in “flexitanks” – shipping container-sized “bag in a box” setups – to save transport costs of weighty glass bottles. Should oil prices skyrocket, we’ll quickly learn exactly how far every item in the supermarket travels.
Most frightening to me is the knowledge that transportation will be one of the hardest things to fuel with renewable energy sources. High energy-density hydrocarbons like gas and jet fuel are perfect for cars and airplanes: They carry a long-distance punch without packing on the weight. We’ll need some big advances in battery technology to recapitulate those efficiencies in trans-oceanic flights.
As energy supplies shrink, therefore, so will our economic horizons. We’ll look to homegrown suppliers of food, wine, and commodities, simultaneously making both more economical and more sustainable choices.
I can think of a few vintages – and flavors – that I’ll be missing. But I can also think of one friend, in particular, who might even be a little grateful. During our travels in New Zealand, I relied on Kathrin to know the best local ice creamery, find the freshest pastries, and pull over at the en route salmon farm. Citizen of the world though she is, she’s also a very local connoisseur.
“It’s almost a shame,” she would say, of finding a favorite Argentinian wine or real German chocolate in the supermarket. “There should always be something that makes actually going to a place special."